SYDNEY, March. 6 (Xinhua) -- After Tuesday's decision to keep Australia's cash rate at the record low of 1.5 percent for the 31st consecutive month, the country's central bank governor said Wednesday "It's hard to think of a scenario where interest rates would need to go up this year."
Addressing the Australian Financial Review Business Summit in Sydney, the Reserve Bank of Australia Governor Philip Lowe acknowledged that the current rate of wage growth down under is unlikely to result in a 2.5-percent rise in inflation, which is the target set by the central bank.
"Inflation pressures remain very benign. Wage growth remains low," Lowe said.
"There continues to be strong competition in the retail sector and governments are responding to the cost-of-living pressures that people feel by reducing the prices of the services they deliver."
"So there are quite a lot of things weighing on the road to inflation."
Also adding to Australia's economic situation is a recent downturn in the country's capital city Canberra housing markets.
"Over the five years to late 2017, nationwide housing prices increased by almost 50 percent," Lowe explained.
"Since then, prices have fallen by 9 percent, bringing them back to their levels in mid 2016."
But despite the downward trend, Lowe is confident that as real estate prices ease, people will soon become drawn back into the market.
"The signalling of a neutral stance on monetary policy isn't to try and support the housing market, it's really just the reflection of the circumstances we face," he said.
"There is no underlying structural adjustment. We have not built too many houses, we have just built enough for the growing population."
"What we do see in the housing market recently is an increasing number of people saying it's a reasonable time to buy a home and that is what happens when prices adjust, people come back into the market."
With many economists predicting that interests rates in Australia are more likely go down before they go up, Lowe said "at the moment, the probabilities appear reasonably evenly balanced."
"There are plausible scenarios under which the next move in interest rates is up. There are also plausible scenarios under which it is down."
"We have the flexibility to adjust monetary policy in either direction as required."
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